State Children’s Health Insurance Program 

Providing Coverage to Nearly Two Million Children 

By Houkje Ross


Closing the Gap, State Children’s Health Insurance Program • January 2000


S

ome working parents don’t make enough money to afford private health care coverage for their children. But at the same 

time, they make too much money to qualify for Medicaid. Fortunately, a federal/state partnership program helps provide low-cost 

or free health insurance to children who are caught in the middle. 

Signed into law in 1997 by President Clinton, the State 

Children’s Health Insurance Program (SCHIP) 

Building on Medicaid 

SCHIP is administered by the Health Care Financing 

dministration’s (HCFA) Center for Medicaid and State Operations 

CMSO). The program, which will make available $39 billion over 

he next ten years, builds on Medicaid, the federal-state health insurA

(

t

ance program that covers 41.4 million low-inprovides health insurance to uninsured children “Since 1989, of low-wage, working parents. SCHIP resulted To receive funding, each state had to submit 

from the Balanced Budget Act of 1997 and is children have lost a plan to HCFA that details how it would use

also known as Title XXI of the Social Security Act. private health coverage SCHIP funds. States have the option of using

U.S. Department of Health and Human Ser­ funds to expand Medicaid, create a separate state 

vices (HHS) Secretary Donna Shalala announced at twice the rate child health insurance program, or combine the 

in January that nearly two million children who of adults.” two programs. States that have separate programs 

come individuals. 

otherwise would be without health insurance 

were enrolled in SCHIP in fiscal year 1999— 

double the number reported in the first full year of the program. 

Eligibility requirements vary from state to state, but in most 

states, SCHIP applies to children who are 18 years old or younger and 

whose parents earn up to $34,100 a year for a family of four. 

Uninsured children 

According to the U.S. Bureau of the Census, more children than 

ever are uninsured. The current number is approximately 11.3 million. Seven in 10 Americans losing health insurance today are children, due in large part to businesses that are cutting support for 

dependent coverage, according to the Children’s Defense Fund. Since 

1989, children have lost private health coverage at twice the rate of 

adults. More than 90 percent of these children have one or more 

working parents. 

Not having consistent care jeopardizes a child’s wellbeing and 

can cost more in the long run. “Oftentimes children without health 

insurance end up in the emergency room at tax payers’ expense, and 

they are more likely to do poorly in school,” says Kristine McGrath, 

communications specialist for the Florida HealthyKids program, one 

of the state’s four programs that receives SCHIP funding. Having 

insurance and being able to go to the doctor before an illness turns 

into an emergency can give parents an overall peace of mind, McGrath 

says. 

By targeting working parents, SCHIP may be helping to lift the 

negative view that has clouded Medicaid and other federal assistance 

programs in the past. According to Emily Cornell, senior policy analyst for the National Governor’s Association, “CHIP was designed as a 

program for working families who typically don’t think of themselves 

as poor or welfare families.” The goal is to insure as many children as 

possible and improve their overall health. 

are allowed cost sharing with beneficiaries. Funds 

are allocated to each state according to the number of uninsured low-income children, accounting for regional cost 

differences. 

HCFA’s State Children’s Health Insurance Program Annual Enrollment Report shows that by September 30, 1999, SCHIP plans 

had been approved for all 56 states, territories, and the District of 

Columbia. Fifteen states chose to create a separate program, while 27 

chose to expand Medicaid, and 14 chose a combination program. 

CMSO offers technical assistance to any state that requests it. Each 

state is assigned a project officer who can provide technical assistance 

on SCHIP. 

Under SCHIP, states set their own eligibility rules. States that 

create separate SCHIP programs may define covered benefits within 

Congressional guidelines, determine subsidy levels, set payment rates, 

and select which health plans and providers participate. For states 

with Medicaid expansions, Medicaid rules apply. All states—except 

for Florida, New York, and Pennsylvania, which had existing state 

programs grandfathered in—must choose between three “benchmark” 

insurance options. They can provide coverage through: 

1)	 the same health plan that is offered by the State to its employees; 

2)	 the Blue Cross/Blue Shield Preferred provider option offered by 

the Federal employees health benefit program; 

3)	 the HMO benefit plan with the largest commercial enrollment 

in the state. 

Required services under SCHIP include inpatient and outpatient hospital services; physicians’ surgical and medical services; lab 

and X-ray services, and well baby/child care services (including immunizations). Beyond this, services vary. For example, the state of 

continued on page 2>>>> 

Office of Minority Health Resource Center	 1 U.S. Department of Health and Human Services 
State Children’s Health Insurance Program 

Providing Coverage to Nearly Two Million Children 

By Houkje Ross 

Closing the Gap, State Children’s Health Insurance Program • January 2000 

Connecticut includes regular check-ups, school and sports physicals, 

prescription drugs, dental care, and vision and hearing testing in its 

plan. But other states may decide to include different services. 

Some states provide more specialized services. For example, the 

Children’s Medical Services program in Florida is a SCHIP-funded 

program that provides care to children with special needs due to 

diseases such as spina bifida, leukemia, and diabetes. 

How to apply for SCHIP 

Families who want to apply for SCHIP or Medicaid can start by 

calling the national toll-free number, 1-877-KIDS-NOW. Callers are 

then referred to the SCHIP program in their state. Most states have a 

toll-free number where individuals can request applications and find 

out more about the program. Operators can answer questions about 

what the program covers, who is eligible, and the minimum qualifications. 

For information about the SCHIP program in your state, contact: 1­

877-KIDS-NOW. Or, browse HCFA’s Web site at: http:// 

www.insurekidsnow.gov.

Office of Minority Health Resource Center 2 U.S. Department of Health and Human Services